Zimbabwe’s Economic Structure posted reasonably positive numbers during the 1980s, averaging 5% GDP growth per year and 4.3% through the 1990s. However, initiatives taken by the government to create a market economy have been unfruitful and shortage of foreign exchange, material supply shortages and rampant inflation have caused cracks to appear in this rosy outlook. The war in Congo, mismanagement and corruption has also contributed to the current bleak outlook for Zimbabwe’s economy since 2000. Currently, the economy is showing the first signs of growth in a decade but clearly much remains to be done before the economic structure of Zimbabwe can boast of stability.
Zimbabwe Economic Structure: GDP Composition
Zimbabwe has a GDP Purchasing Power Parity (PPP) of $332.1 million (2009 est.), as compared to $320.3 million in 2008 and $2.371 billion in 2006. The real growth rate of the GDP in 2009 was a low 3.7%. Previously, growth was actually negative at -14.4% in 2008 and -4.6% in 2006. However, the GDP per capita (PPP) remained constant during 2006-2008 at $200.
Agriculture contributes 19.1% to the GDP, while industry provides 23.9% and the highest contributor, services, is at 56.9%. Of Zimbabwe’s 3.84 million strong workforce, 66% is involved in agriculture, 10% is employed by industry and manufacturing and 24% is in services. The bad news is that unemployment is at an astronomically high 95% (2009), increasing from 80% in 2005. Furthermore, 68% of the population is below the poverty line and gross fixed investment is 21.5% of the GDP. Budget revenues are slated at $133 million and expenditures at $258 million.
Zimbabwe Economic Structure: Inflation
Up till 2009, the Zimbabwe government allowed printing of money to fund a budget deficit, consequently causing hyperinflation. Printing of higher denominations of the Zimbabwean dollars (ZD) caused exchange rates to go from 24 ZD per US dollar (USD) to 250 newly printed ZD in 1998. By 2006, a new re-valued ZD was issued, which was equivalent to 1,000 of the old ZD and the old ZD was equal to 250,000 per USD. In 2009, a 100 trillion ZD bank note was printed that was equal to 1,000,000,000,000 of the previous ZD.
Currently Zimbabwe’s economic structure trades with various external currencies, such as the Euro, the South African Rand and the Botswana Pula. Use of the USD has caused inflation to decline to -3%.